Synergies of Progress: AI, Religious Freedom, and Economic Growth

By Soham NandiReviewed by Susha Cheriyedath, M.Sc.Mar 11 2024

In an article published in the journal Nature, researchers explored the intricate relationship between artificial intelligence (AI), religious freedom, and economic growth across 26 countries from 2000 to 2021. Using a panel vector auto-regression (PVAR) model, the authors revealed a significant positive correlation among these factors.

The forecast-error variance decomposition indicated their increasing importance, projecting a continued impact on future economic landscapes. The researchers also confirmed the enduring influence of traditional growth drivers, emphasizing implications for academia, policymakers, and stakeholders. 

Background

The intersection of AI, religious freedom, and economic growth has garnered significant academic attention. While AI's transformative potential in shaping economies has been explored since its inception in the mid-20th century, recent studies have delved into its nuanced impact on various aspects of society, including religion. Concurrently, the complex relationship between religious freedom and economic growth has been a focal point, emphasizing their intricate interplay.

Notably, research has elucidated the diversified role of religion in societal structures and its influence on socioeconomic patterns. However, despite these advancements, a gap exists in understanding how AI and religious freedom jointly contribute to economic trajectories across diverse nations. This study bridged this gap by conducting a comprehensive analysis across 26 countries from 2000 to 2021. By employing PVAR analysis, the research identified a significant positive correlation between AI, religious freedom, and economic growth.

Unlike prior work, it utilized forecast-error variance decomposition to highlight the evolving importance of these factors in shaping future economic trends. The study also underscored the enduring significance of traditional economic drivers, namely labor and capital, offering a holistic perspective on the intertwined dynamics influencing economic progress. In essence, this research added depth to the existing literature by providing a nuanced understanding of the synergies between AI, religious freedom, and economic growth, addressing prior gaps and contributing valuable insights for scholars, policymakers, and economic analysts.

Variable and PVAR Model

The authors investigated the intricate interplay between AI, religious freedom, and traditional economic drivers (labor and capital) in shaping economic growth across 26 countries from 2000 to 2021. The variables considered included AI progress measured by patent filings, religious freedom quantified on a scale from zero to one, and economic growth assessed through gross domestic product (GDP). Capital input was represented by gross capital formation, while labor input was reflected in employment rates. This comprehensive examination sought to understand the evolving dynamics and potential synergies among these factors.

To analyze these complex interactions, the researchers employed a PVAR model, building upon established economic theories such as the neoclassical growth model and the endogenous growth theory. The PVAR model was chosen for its ability to handle individual differences over time, incorporating fixed effects to enhance accuracy. The model treated all variables as endogenous, considering their mutual dependence and interactions.

The study's adapted production function integrated AI and religious freedom alongside traditional factors to provide a nuanced understanding of their combined impact on economic growth. Before delving into the PVAR analysis, the study conducted panel unit root tests to confirm the stationarity of variables. It employed advanced diagnostics, such as the Pesaran diagnostic test, to thoroughly analyze cross-sectional dependence, crucial for reliable estimations. Additionally, the study applied the cointegration test developed by Westerlund to examine potential long-term relationships among variables. This test accounted for cross-sectional dependence, providing robust p-values adjusted through bootstrapping.

Results and Discussion

The authors employed advanced second-generation panel unit root tests to confirm the stationarity of variables, considering cross-sectional dependence. Results consistently rejected the null hypothesis, indicating strong cross-sectional dependence among the examined countries. Subsequent panel unit root tests affirmed first-order integration for the key variables, laying a foundation for further analysis. The cointegration test, designed for interdependent units, supported the null hypothesis, suggesting the absence of enduring relationships among AI, religion, labor, capital, and economic development.

Moving to the PVAR estimation, the results revealed a positive correlation between AI, religious freedom, labor, capital, and economic growth. Causality tests, utilizing the Toda-Yamamoto conditional Granger causality test, indicated a clear causal relationship among these variables, aligning with existing literature on technology, societal freedoms, and economic factors driving growth.

The impulse response function analysis depicted the systemic evolution resulting from one-standard-deviation shocks, indicating a notable positive impact of AI and religious freedom on economic growth. The variance decomposition analysis further quantified the contributions of each variable to the forecast-error variance in economic growth. AI and religious freedom emerged as influential contributors, with labor and capital inputs playing paramount roles.

Conclusion

In conclusion, the authors unraveled the intricate relationships between AI, religious freedom, and economic growth across 26 countries from 2000 to 2021. Utilizing a robust PVAR model, the research identified a significant positive correlation and underscored the escalating influence of these factors on future economic landscapes.

Traditional drivers, labor, and capital remained pivotal. Policy implications emphasized prioritizing AI integration, fostering religious freedom for economic benefits, and refining policies on labor and capital. While limitations exist, future research directions aim to enhance global representativeness and delve deeper into nuanced relationships, offering valuable insights for policymakers and stakeholders alike.